How the U.K. Buys and Sells TV

Year-Round Model Seems Simple, but Still Has Its Own Oddities

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With so much talk in the U.S. of changing the annual TV marketplace known as the upfront, Advertising Age decided to look into how TV ad time is bought and sold in key markets around the world. This is the first in a series.

LONDON ( -- The Brits take a more measured approach to the buying and selling of TV time.
ITV1's popular 'Coronation Street' expects to get a large chunk of the ad budgets of U.K.'s package-goods marketers.
ITV1's popular 'Coronation Street' expects to get a large chunk of the ad budgets of U.K.'s package-goods marketers.

To begin with, the sales process is spread out across the year, rather than one big push to sell the whole season "upfront" the way the U.S. broadcasters have traditionally approached marketers. British TV buyers are treated to quarterly screenings of new season programs -- plus plenty of canapes, cava and a celebrity presence -- but these events are not crucial to decision-making.

Chris Williams, TV director of Starcom U.K., doesn't give these advance presentations too much weight: "If you can't make a 20-minute montage look good then you really are in trouble."

Jim McDonald, MPG's head of broadcasting, takes a slightly more serious view. "It does affect TV-buying decisions. You come to a view of the investment that a channel is putting in, and whether it is really looking to be new and innovative," he said. "And there is a certain kudo in picking winners ahead of your rivals."

Four-times-a-year approach
The four-times-a-year approach brings to mind the "365 days" mantra that many U.S. upfront participants have been bantering about for the last few years, with players often quoted as saying what matters is how they've done at the end of the year, not just in May.

In the U.S., May is all about selling what is to come, and buyers must make their best guesses as to how new shows will perform. In the U.K., the major decisions are made with an eye to past programming, not future possibilities.

TV buying is "very scientific and methodical -- it's planning by numbers," Mr. Williams said. "It became like that as agencies got larger." There are no "sweeps weeks" in the U.K., where the industry is small enough and regulated enough that viewing figures are available in minute detail on a daily basis for the preceding 24 hours.

U.K. media buyers commit a share of a client's advertising budget to a particular channel over a calendar year, and negotiate discounts on that basis. ITV1, the U.K.'s biggest commercial channel and home of the popular "Coronation Street" and "The Bill," expects to get more than 50% of the budgets of most package-goods marketers, for example.

Channel 4, which airs the U.S. hit "Desperate Housewives," would typically get 15% to 20% and Channel 5 would pick up 10%, with the remaining 20% going to satellite channels.

Not about volume
Mr. McDonald said, "It's not about volume -- if you spend nothing, the station gets nothing. Stations are partly judged by their revenue, but much greater reference is made to overall share [of budgets]."

Money is usually allocated to a channel only a month or so in advance.

The starting point for price negotiations is the station's average price, which is calculated very simply and candidly by looking at the previous year's figures -- the amount of money spent divided by the actual audience delivered by a TV station in specific time slots over the year.

Airtime is then sold on the basis of how much money it costs to reach 1,000 viewers in a particular time slot, and media buyers will then fiercely negotiate discounts for their clients from this base figure.

Illogical pricing
This system can lead to seemingly illogical pricing -- for example, in January, when viewing figures are high because of long, dark nights and post-Christmas lethargy, airtime is relatively inexpensive because demand from advertisers is low because they figure people are spending less money at that time of year.

U.K. TV's biggest anomaly is that if a program is doing badly and fails to deliver the anticipated audience, its airtime becomes more expensive because there are more dollars chasing fewer viewers. This situation happens most often on ITV1, which competes with the government-funded and ad-free programming of the BBC.

"It's a ridiculous situation," Mr. McDonald said. "ITV's audience is down but the price goes up because advertisers need to reach people. There is more choice and because we have more alternatives, demand is drifting away from ITV."

In the long-term, though, a channel will suffer a drop in annual advertising investment if it is not delivering a good audience. Bad audiences may be rewarded in the short term, but will be penalized over the long term.

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Chris Williams, TV director, Starcom U.K.: "I like the emphasis put on programming in the U.S. We are a bit reactive -- we have an eye on upcoming programs but we rely on past performance. We're not future-facing.

Neil Johnston, head of TV, OMD U.K.: "In the U.K., we don't split out cable and satellite television from mainstream channels. Ultimately, the plan is to deliver overall coverage and frequency, so to buy separately doesn't seem sensible."

Andy Zonfrillo, head of investment, Mindshare U.K.: "We have a very different system from the U.S. Lots of our big agency deals are traded for a year or two at a time and we don't have make-goods -- we deal with agreed prices."
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